News and opinions on the situation in Venezuela

Carlos Herrera: Endemic price speculation continues prejudicing the poor


VHeadline commentarist Carlos Herrera writes: Venezuela‚s economy has always been speculative, since the means of production, distribution, transport and sales to the final consumer were, and still are, in few oligarch hands.

A good example of this was when the Colombian supermarket chain ÉXITO, purchased the Venezuelan CADA network some years ago.

The Colombians were more than pleasantly surprised at the high margin of profit on each item sold, when compared to their operations in Colombia.

The mindset of the Venezuelan entrepreneur knows no bounds when it comes to “making a fast buck.‰ The three cell phone companies have so many call plans that even they must be confused, as they continue to bombard the population with offers, new plans and new gadgets for the better off. Cell phone use and sales rose 20% in Venezuela in 2004 to 8.2 million users - or 32% of the population, as the Venezuelan love affair with this technology continues, even though there are more land lines and communications centers in the country than ever before.

With so many complicated plans, free seconds, free text and voice messages, no one really knows what they are paying, and most people feel overcharged: It really is disgraceful when pre-paid calls by cell phone are at least 300% higher than if you pay by check, cash or risk living your credit card number to these exploiters.

Today, CAVIDEA, the food suppliers in the private sector put forward proposals for the increase in price of basic food items by between 10-40%. These are mass consumption items and therefore represent the chance of another killing by the speculative minded entrepreneurs that still populate the Venezuelan business world.

Imagine, they wanted to up the price of pasta by 20%, sardines by 25% and corn flour also by 25%.

In what other country of the world would any government even listen to these insane proposals, just when inflation hit the lowest monthly level in 17 years, coming in at 0.2% for February.

These “entrepreneurs‰ simply do not care about the state of the nation of their fellow underprivileged citizens

Now that Mercal (government food stores) are serving around 9 million people after less than two years, since their launch in May 2003, with controlled prices and real bargains, CAVIDEA and the private supermarkets have lost sales volume.

In any normal economic mindset, the answer would be to lower prices to compete.

Not in Venezuela!

The solution is to put prices up to compensate for a drop in sales…

This is the key reason why Venezuela has suffered on average from such high inflation for more than 20 years, when compared to other countries. The press‚s tendency is still to blame the government for everything, when it is in fact the speculative mentality of the private sector that is to blame. It‚s they who increase prices at any excuse, not the government.

These people have less than zero social conscience.

In Mercal, prime quality meat costs Bs.7,560 per kilo and a kilo of chicken Bs.1,900. In the private supermarkets and butchers, meat is sold at least at Bs.12,000 per kilo and chicken at Bs.3,100. (The situation is worse in Caracas, which has become a speculator‚s paradise) Late last year a kilo of beef “on the hoof.‰ was around Bs.3,000.00 a kilo on the ranch. At present, the same beef on the hoof is Bs.1,500-1,700 per kilo and in the butchers and supermarkets? You‚ve guessed it - the prices are the same or have been increased due to the recent devaluation of the US dollar (on domestic production)?

This is just a pretext, and a clear illustration of the mentality pervading the business community … this information was given out today on VTV by Dr. Agustin Campos, president of the Bolivarian cattle ranchers and farmer‚s confederation, CONFAGAN.

Perhaps the worst offenders are auto repair shops … and the very worst offenders are the official concessionaries. Not only are the mechanics badly paid, but they work on a commission basis, so that the more they find wrong with your vehicle, the more they earn.

What a trustworthy mechanic charged me to fix the air conditioning on my wife‚s Corsa, the official concessionary wanted to replace the whole system - compressor, condenser etc. I paid Bs.80,000, against the quotation of Bs.3,000,000 given me to by the concesión manager after his commission-paid mechanics had identified the problem.

Two of the main private TV channels, RCTV and Venevsion, were fined Bs.43,000,000,000 by Procompetencia (fair competition organization) for ganging up on other channels when it came to selling advertising spots. Basically, the salesmen would go in together and offer a package deal to the potential advertiser, if he did not advertise with Televen, for example. This nefarious practice has been going on for at leat ten years and finally Marcel Granier of RCTV and Gustavo Cisneros of Venevision have got their well-deserved come uppance. Justice is starting to function at last, after years of unbridled and almost disgusting impunity for the rich and privileged.

Other methods used to fleece the public are the creation of artificial shortages by hoarding goods and then releasing them on to the shop shelves when the price has gone up. I remember this happening with toilet paper, coffee, sugar, powdered milk and corn flour.

Thank goodness that the new laws consider jailing offenders, when before they just received a slap on the wrist or an insignificant fine.

The Venezuelan public has historically put up with these abuses, but sooner or later, the common people will organize themselves and boycott products and services if they feel they are being ripped off. This is still a long way off, and until that day comes the only way in which the consumer can defend himself is to go to the INDECU (Consumer Protection & Education Service) and file a complaint, or simply not buy the product itself.

The other extremes are riots and looting to protest against wholesale or unjustified price increases, as happened on February 27, 1989, when then President Carlos Andres Perez let the troops loose and massacred anything up to 3,000 people.

We Venezuelans must try to steer a middle course, get organized, protest peacefully and effectively against unfair practices.

The protests must be constant and by applying this methods, the speculative mindset may begin to decline and everyone will have a better deal … without tear gas, bullets and bloodshed.

Carlos Herrera

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